US vs. Canada Bitcoin ETFs: A Tale of the Biggest Buyer and the Worst Loser

In 2024, the global landscape of Bitcoin exchange-traded funds (ETFs) saw a dramatic shift, with the United States emerging as the dominant player, while Canada, once a pioneer in the space, found itself on the losing end of the trend. The US has become the world's largest holder of Bitcoin ETFs, while Canada has experienced unprecedented outflows from its crypto ETFs, reflecting a broader shift toward more liquid US-based options.

US Dominates Bitcoin ETFs

The US has firmly established itself as the global leader in Bitcoin ETFs, with American products accounting for 100% of the $44.2 billion in inflows to cryptocurrency exchange-traded products (ETPs) in 2024. This surge has solidified the US as the largest market for Bitcoin ETFs, with assets under management (AUM) surpassing all other nations by a significant margin.

Switzerland, the second-largest buyer of crypto ETPs in 2024, saw just $630 million in inflows, highlighting the vast gap between the US and the rest of the world. This dominance comes just one year after the US Securities and Exchange Commission (SEC) approved the first-ever spot Bitcoin ETFs in January 2024, providing a major boost to the market.

As the world's largest capital market, the US is naturally poised to lead in Bitcoin ETFs. The US accounts for more than 70% of the global ETF market, which is valued at approximately $15 trillion. With decades of investor trust in ETFs and a history of embracing high-risk, high-reward opportunities—particularly in technology—the US has become the go-to market for Bitcoin ETF products.

Matt Mena, a crypto research strategist at 21Shares, explained that the US's dominance in ETFs is no surprise, given its role as the birthplace of the ETF and its position as the largest ETF market globally. The country's investor base is well-versed in the ETF structure, which has helped foster confidence in Bitcoin ETFs. James Butterfill, head of research at CoinShares, added that the US's adventurous investor mindset and its openness to risk, especially in emerging technologies like Bitcoin, have further propelled the growth of Bitcoin ETFs.

Canada: From Trailblazer to Struggling Market

In contrast, Canada, which launched the world’s first physically-settled Bitcoin ETF in 2021, has seen a significant decline in interest from investors. In 2024, Canada experienced a record outflow of $707 million from its crypto ETPs, marking the largest outflow in the country’s history. This stark contrast to previous years is emblematic of the shifting dynamics in the Bitcoin ETF market.

In 2021, Canada was at the forefront of Bitcoin ETF innovation, with the launch of the Purpose Bitcoin ETF by Purpose Investments in February. The fund's debut was a resounding success, attracting $564 million in assets under management (AUM) within just five days. Over the next year, Canadian crypto ETFs saw $4.2 billion in inflows, solidifying Canada's position as a pioneer in the sector.

However, the arrival of US Bitcoin ETFs in 2024 led to a dramatic reversal of fortunes. As US-based products gained traction, Canadian ETFs, once seen as the only liquid option for spot Bitcoin investment, began to see large outflows. This shift was largely driven by the superior liquidity, broader investor participation, and stronger institutional support offered by US Bitcoin ETFs.

Mena pointed out that the regulatory environment in Canada had initially given its ETFs a competitive advantage, as US regulators had not yet approved spot Bitcoin ETFs. However, with the launch of US-based spot Bitcoin ETFs, many investors—particularly those outside Canada—moved their funds to these more liquid and accessible US alternatives.

Canada’s Bitcoin ETFs: A Victim of Global Shifts

This trend has resulted in Canadian crypto ETFs becoming the only category of exchange-traded products in Canada to experience outflows in 2024, according to Bloomberg data. The shift to US-based products has been especially pronounced among non-Canadian investors, who had previously used Canadian Bitcoin ETFs as a way to gain exposure to the asset class.

With US Bitcoin ETFs now firmly established as the global leaders, it seems unlikely that another market will surpass the US in terms of Bitcoin ETF AUM in the foreseeable future. While European issuers, such as CoinShares, have diversified their crypto product offerings, including ETPs that offer staking yields, the US’s position remains unrivaled in terms of total assets and market influence.

Conclusion: The Changing Dynamics of Bitcoin ETFs

In summary, the US has emerged as the clear leader in the Bitcoin ETF market, attracting the majority of global inflows and dominating the industry with significant assets under management. Meanwhile, Canada, once a trailblazer in the Bitcoin ETF space, has seen substantial outflows, as investors flock to more liquid and accessible US alternatives.

As the Bitcoin ETF landscape continues to evolve, the US’s position as the world’s largest ETF market is unlikely to be challenged anytime soon. While Canada still holds a place of significance in the history of Bitcoin ETFs, it is now facing stiff competition from the US, which has capitalized on its size, liquidity, and regulatory environment to dominate the market.